Clearing the decks for a liberalised Foreign Direct Investment regime, the Government notified the new foreign investment norms for various sectors including public sector oil refineries, mining of titanium bearing minerals and commodity exchanges, even as it remained silent on construction development projects.

While Press Notes were issued for six sectors including Civil Aviation, Credit Information companies; the Real Estate industry may be disappointed. Contrary to expectations there was no explicit clarification for construction development projects, that investments by registered FIIs under the portfolio Investment Scheme would be distinct from FDI, outside the purview of Press Note 2 (2005) and with threeyear lock-in conditions. The much-needed clarifications on FDI and FII norms would have increased the inflow of capital for construction development projects.

According to the guidelines issued by the Department of Industrial Policy and Promotion, FDI up to 100 per cent would be allowed for both setting up and establishment of industrial parks under the automatic route. The official press note stated that the Industrial Parks should comprise a minimum 10 units, with no single unit occupying more than 50 per cent of the allocated area. The government also notified FDI to be allowed in credit information companies. FDI and FII would be allowed up to 49 per cent with prior government approvals and RBI’s regulatory clearance. The government has also issued a formal notification to raise the FDI limit in public sector refineries to 49 per cent and notified that up to 49 per cent of FII would be allowed in commodity exchanges.

The composite limits for the FDI and FII, both direct and indirect, has been kept at 74 per cent for infrastructure and platform services like Teleports, DTH, HITS and Satellite Radio, Currently, DTH is allowed FI up to 49 per cent, and 20 per cent FDI; satellite radio is uncapped. The cable TV business remains unaltered with its limit standing at 49 per cent, so also the news and current affairs channels, wherein FDI will continue at 26 per cent.

Singapore, with a total investment of US$2.69 billion presently ranks 4th in terms of FDI inflows into India and is the first among ASEAN nations. FDI from Singapore accounts for 5.76% of the cumulative FDI inflows into India (in rupee terms). There are more than 37 approved Indian JVs in Singapore and more than 30 wholly-owned subsidiaries.

The major investment from Singapore have been in Telecom, Service Sector, Electrical Equipment, Fuels and Transportation. During March 2008, the Finance Ministry cleared 18 FDI proposals worth Rs.1,553 crore. Among the approved proposals, the notable ones are Essar Capital Ltd's Rs.560 crore investment to acquire the status of holding company, for downstream investments; Cyprus-based Melbrook Ltd's proposal to invite Rs.125 crore FDI, for a status change from operating company to o p e r a t i n g - c u m - holding company. Redington India Ltd. would bring in Rs.195 crore as foreign equity by holding company, while Ortel C o m m u n i c a t i o n s would affect a c o m p u l s o r y convertible for Rs.60 crore. JSW Energy would induct Rs.63 crore FDI in a holding company, through an IPO.

The government has, however, rejected four FDI proposals, from Red Fort India Realty Fund, Azorim International Holdings Ltd, Wadhwa Associates Realtors and Xcel Telecom Pvt Ltd. Seven proposals have been deferred, including those from Singapore-based Singtel Australia Pte Ltd., and KNOX Holding Pte Ltd. Two FDI proposals rom Chennai-based Rakindo Developers Pvt Ltd and Agam SPV Ltd from Caymen Islands, have been recommended to the Cabinet Committee for Economic Affairs, for consideration.